Bankruptcy is meant to give debtors a second chance, but it also has some negative consequences. This article explains what happens after you file for Chapter 7 bankruptcy or Chapter 13 bankruptcy after your case is closed.
Legal matters can be complex and stressful. A qualified Tulsa bankruptcy attorney can meet your specific legal needs, explain the law, and represent you in court. Take the first step now and contact a Tulsa bankruptcy attorney to discuss your particular legal situation.
What happens in a bankruptcy case?
After you file for bankruptcy, the following will happen:
- Appointment of trustee. Once you file for bankruptcy, a trustee will be assigned to your case. The trustee will handle the administration of your bankruptcy case.
- Creditors meeting. The first thing the trustee does is hold a creditors’ meeting. In it, you must answer under oath about your assets and debts. Creditors may attend the meeting, but only the trustee and debtor are generally present.
- Automatic payment hold. Filing bankruptcy triggers termination or suspension of payments. Your creditors may contact you about your credit card or another type of debt. If there is a pay cut, they have to stop.
- Financial administration course. You will be asked to take classes to help you manage your finances once your debts are discharged into bankruptcy. The bankruptcy court will not dismiss your case until you attend these classes.
- Property sales. In chapter 7 bankruptcy cases, the trustee can sell some of your assets and distribute the money to your creditors according to the priorities of the bankruptcy law. Certain assets, such as household items, cars, and clothing, cannot be sold.
- Payment plan. Chapter 13 Bankruptcy requires debtors to make payment plans with their collectors to have their debts forgiven.
- Exemption or forgiveness of debts. The court will pardon your debt at the end of the bankruptcy proceedings.
What happens to the secured debt?
Guaranteed debt is debt that is secured by an asset. The most common cases are car loans and mortgage loans. If you don’t pay for your car, the bank can put it up for auction for collection. And if you don’t pay your mortgage, the bank will initiate a foreclosure process to pay for itself with the money from the sale of your home.
In the case of article 7, it is permissible to auction houses or cars. To protect these assets, you must agree with the bank. In the case of chapter 13, you will be able to defend your home if you make the payments required by the payment plan agreed upon with the court.
What debt is not forgiven?
Though exceptions exist, many debts will be forgiven once the bankruptcy proceedings are completed.
Bankruptcy does not condone the following types of debt:
- student loan
- tax payable
- Spouse support or debt
- Fines from criminal cases
What will happen to your credit score?
Filing bankruptcy will lower your credit score, and your case may appear in public records for ten years in a chapter 7 case and seven years in a chapter 13 case.
If you want to improve your credit score after bankruptcy, you must:
- Pay your bills on time
- Please get a new credit card and pay it off on time
- Don’t borrow money if you can’t return it
You may have difficulty getting a home or car loan after filing for bankruptcy. However, if you work to increase your credit, your options for the future will increase.
Is it possible to file for bankruptcy more than once?
Yes, but there are conditions.
Previous Chapter 7. Bankruptcy You must wait eight years to file a chapter 7 case and four years to file a chapter 13 case.
Chapter 13 Bankruptcy Previously, you had to wait six years to file a Chapter 7 case and two years to file a Chapter 13 case.
What can you do if you have more questions?
Bankruptcy allows you to make a fresh start. However, it is necessary to have a thorough knowledge of federal laws and bankruptcy procedures. Bankruptcy can have long-term consequences. Therefore, speaking to a bankruptcy attorney and obtaining guidance for your particular situation is advisable.
